Letwin: 'We'll trim public spending'

Oliver Letwin, the shadow chancellor, has said that a Conservative government would continue investing in health and education despite a commitment to trim £35 billion a year from public spending.

Mr Letwin was trying to fend off accusations about "slashing" vital services, by making clear that investment in a reformed health service and schools would be broadly in line with that planned by the Labour government.

In a keynote speech in London, Mr Letwin warns that Chancellor Gordon Brown's spending plans are building up a structural deficit in the public finances which would necessitate "significant tax rises" if Labour were re-elected.

In contrast a Conservative government, by gradually reducing the share of national wealth consumed by government spending, would eliminate the deficit and, ultimately, "provide a firm basis for sustainable medium term reductions in the burden of tax."

Ahead of the speech, Mr Letwin said: "Experts say there is a black hole in the public finances and that taxes will need to go up after the next election unless government spending is brought under control.

"We would balance the books, but our plan for achieving that is guided by our priorities. We think Britain needs a better NHS and better schools. That means more money. But it also means more control for patients, parents and professionals so that we get more bang for the taxpayer's buck.

"We also think it would be wrong to pile on more tax increases when family budgets are already stretched."

Even before he unveiled the details of his proposals, Mr Letwin's plan prompted Cabinet Office minister Douglas Alexander to accuse him of plotting "massive cuts" to schools, hospitals and the police.

David Laws, the Liberal Democrat Treasury spokesman, said Mr Letwin had given voters a glimpse of a "miserable" Tory Britain.

In his speech to the Bow Group centre-right think-tank, Mr Letwin was arguing that a growing economy can sustain prudent cash increases in public spending. But the proportion of national wealth accounted for by the public sector under the Labour Government must be shrunk if increases in taxation are to be avoided, according to the shadow chancellor.